Foreign investors have kicked off 2026 as net sellers, extending the heavy exodus seen in Indian equities last year. In the first two trading sessions of January, foreign portfolio investors (FPIs) withdrew Rs 7,608 crore, or about $846 million, signalling continued caution at the start of the new year.
The fresh sell-off comes after a sharp withdrawal in 2025, when FPIs offloaded Indian stocks worth Rs 1.66 lakh crore ($18.9 billion). Last year’s record outflows were driven by currency volatility, global trade tensions, concerns over potential US tariff actions, and worries that domestic market valuations had become stretched. Persistent foreign selling also weighed on the rupee, which depreciated nearly 5% against the US dollar over the year.
Despite the weak start, market experts believe sentiment could improve as 2026 progresses. VK Vijayakumar, chief investment strategist at Geojit Investments, said foreign investors may reassess their stance if domestic fundamentals strengthen. Robust economic growth and a recovery in corporate earnings could help revive overseas interest in Indian equities, he noted.
Vaqarjaved Khan, senior fundamental analyst at Angel One, pointed to several possible triggers for renewed inflows. These include easing India–US trade tensions, a supportive global interest rate environment, and greater stability in the USD-INR exchange rate. He added that valuations now appear more reasonable compared with last year, reducing a key concern for foreign investors.
For now, caution remains the dominant theme. Data from the National Securities Depository Ltd (NSDL) shows FPIs were net sellers of nearly Rs 7,608 crore between January 1 and January 2. Market participants also note that early-year selling is not unusual—foreign investors have pulled money out of Indian equities in January in eight of the past ten years, often waiting for clearer global and domestic cues.
Going ahead, FPI flows are expected to remain closely linked to global developments and macroeconomic trends. While valuation pressures have eased somewhat, overseas investors are likely to stay selective, closely tracking economic data and external signals before turning decisively bullish.
FIIs Start 2026 on a Cautious Note, Pull Out Rs 7,600 Crore From Indian Stocks in 2 Days
